Balearics and Asturias to tap regional bailout fund

The Balearic Islands and Asturias on Friday became the latest cash-strapped Spanish regions to tap Madrid’s bailout fund, from which they are seeking 355 and 261.7 million euros respectively.

The regions’ financial straits were highlighted Friday by Valencia, which said it plans to sack at least 3,000 public sector workers, some 40 percent of the total, and close down 46 public companies. The figure does not include the 1,200 employees dismissed at the region’s RTVV broadcaster, which had a workforce of 1,800.

Eight regions have now asked for financial assistance from the Regional Liquidity Fund (FLA), which was set up with resources of 18 billion euros. The petition from the Balearic Islands and Asturias brings total requests to around 17 billion euros. The fund will be in existence until the end of this year.

Andalusia needs close to five billion euros; Catalonia has requested just over five billion, and Valencia 4.5 billion. The Canary Islands wants 756 million, Castilla-la Mancha some 800 million and Murcia 300 million. Of the country’s 17 regions<, only Madrid, La Rioja and Galicia have ruled out tapping the FLA.

The deputy economy commissioner for the Balearic Islands, Josep Ignasi Aguiló, said Friday that of the 355 million euros the regions is requesting, 189 million will go to cover maturing debt and the rest for current spending needs. Regional premier José Ramón Bauzá in July said the Balearic Islands would not need to tap the FLA.

The loans from the FLA are repayable in 10 years with a two-year grace period. They will carry an interest rate of 30 basis points above the yield paid by the Treasury for such loans. The average yield at an auction of 10-year government bonds on Thursday was 5.458 percent.